Editorial: Understanding is the economic key

Sun, Sep 02, 2012 - Page 8

The nation’s economic outlook is gloomy. The latest economic figures released by the Council for Economic Planning and Development (CEPD) show that Taiwan’s export-driven economy has continued its slowdown over the past nine months, employment prospects remain unfavorable and there is little optimism for the local stock market.

That is why the Cabinet has recently been organizing a number of forums with business representatives and academics at which they have been discussing how to tackle the nation’s economic woes, with topics ranging from international trade and cross-strait financial exchanges to national energy policies and tourism development.

One such forum, focusing on the nation’s human resources development and employer-labor relations, was held yesterday, after the issue of talent shortages became a hot topic in Taiwan in recent weeks. Just days before the forum, the CEPD on Thursday put forward a proposal to allow companies the right to hire up to 40 percent of their workforce from overseas, for a maximum period of six years, as part of a preferential package aimed at encouraging Taiwanese companies to bring their operations home after years of operating overseas.

Under the CEPD proposal, the companies which will be entitled to such hiring incentives are those which invest significant amounts of money in Taiwan, intend to develop international brands and which own key technologies and play a key role in their respective industries.

The CEPD proposal aims to address an issue that has been facing Taiwanese companies operating overseas for a long time. As the international investment environment has deteriorated in recent years — especially in China — due to surging wages, rising raw material costs and more restrictive regulations, many Taiwanese firms have been wondering whether they should move their businesses back home.

By all accounts, Taiwan’s land and labor costs, as well as other operating expenses, are higher than those in China and many Southeast Asian countries. Even though the government has in recent years reduced land prices in major industrial parks and amended tax codes to make it easier for prospective companies to invest in their home market, getting overseas Taiwanese companies to return remains a difficult task. These companies have ongoing concerns about some restrictive regulations, especially those regarding foreign labor quotas and the minimum wage in free-trade port areas and special economic zones.

The CEPD’s proposal still needs Cabinet approval before it can be put into practice. However, the Council for Labor Affairs (CLA) has said the proposal is inconsistent and contradicts the CEPD’s target of attracting high-end and high-value-added production to Taiwan — a model which demands a high-quality workforce.

The CLA’s argument is that the government should be nurturing a higher-quality workforce and removing regulatory barriers, which will help local businesses upgrade production. As a result, local wages and employment should increase — a vital development at a time of high unemployment and stagnant salaries. On the contrary, what the government should not be doing, the CLA claims, is relaxing regulations on foreign labor that impede economic advancement.

There is no quick fix and there are many possible solutions to Taiwan’s economic woes — such as investment in education, innovation and infrastructure. However, it is interesting to see that various government agencies maintain such different stances toward the labor issue. Nevertheless, it is a worrying sign that government agencies are not united in tackling the nation’s economic problems.

The government seems to have problems figuring out how to actually help companies. Officials appear not to understand what local industries need. If this is the case, all these forums and proposals are futile.